Nigeria’s crude revenue threatened as UAE exits OPEC

•Move’ll trigger global oil price volatility, say experts

By Adewale Sanyaolu

Nigeria’s oil revenue is facing fresh uncertainty following the United Arab Emirates’ decision to quit the Organisation of Petroleum Exporting Countries (OPEC).

The move, experts warn, could unsettle global crude prices and weaken market stability.

The UAE, one of the bloc’s major producers with significant spare capacity, may ramp up output outside OPEC quotas, increasing supply and putting downward pressure on prices. Analysts say the development poses risks for Nigeria, whose budget and foreign exchange earnings remain heavily dependent on crude oil exports.

The UAE energy ministry announced the quitting from OPEC in a statement on Tuesday.

The UAE is one of the largest oil-producing countries in OPEC, producing about 3.5 million barrels per day before the US/Israel war on Iran disrupted global oil production and distribution.

The UAE’s formal exit has been set for Friday, the 1st of May.

“This decision follows a comprehensive review of the UAE’s production policy and its current and future capacity, and is based on our national interest and our commitment to contributing effectively to meeting the market’s pressing needs,” it said.

It is also withdrawing from the global oil bloc’s wider alliance, OPEC+.

This decision comes in the wake of the US-Israel war on Iran and the struggle over control of the Strait of Hormuz, which has caused a global energy shock.

Commenting on the development, energy policy analyst and partner at Bloomfield Law Practice, Mr. Ayodele Oni, said Nigeria and others should prepare for oil price volatility because the UAE has significant spare production capacity.

He added that, outside OPEC, it could pump more freely, increasing global supply.

According to him, more supply translates to a potential drop in crude prices.

He added that Nigeria, which depends heavily on oil revenue, could see reduced earnings.

Oni maintained that the UAE’s exit from OPEC signals competitive pressure because Nigeria and the UAE both export similar crude grades to overlapping markets, especially in Asia.

According to him, a more aggressive UAE production strategy could undercut Nigeria’s market share.

On the flip side, he explained that the situation presents an opportunity for Nigeria to negotiate higher production output with OPEC or quietly increase production if infrastructure and security issues allow it.